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Home My WebLink AboutTC Res 2005-02-02 (2) 30030-04 JH:SRC:sgs 1/19/05 RESOLUTION NO. 04-2005 A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF TIBURON AUTHORIZING ISSUANCE OF LIMITED OBLIGATION IMPROVEMENT BONDS Lyford Cove Utility Undergrounding Assessment District Adopted February 2, 2005 Section 1.01. Section 1.02. Section 1.03. Section 2.01. Section 2.02. Section 2.03. Section 2.04. Section 2.05. Section 2.06. Section 2.07. Section 2.08. Section 2.09. Section 3.01. Section 3.02. Section 3.03. Section 3.04. Section 3.05. Section 3.06. Section 3.07. Section 3.08. Section 3.09. Section 3.10. Section 3.11. Section 4.01. Section 4.02. Section 4.03. Section 4.04. Section 4.05. Section 5.01. Section 5.02. Section 5.03. Section 5.04. Section 5.05. Section 5.06. Section 5.07. Section 5.08. Section 5.09. Section 5.10. TABLE OF CONTENTS Page ARTICLE I DEFINITIONS; GENERAL DEFINITIONS................................ .......................................................................... 2 UNPAID ASSESSMENTS....................................................... ...... .......................... 8 EQUAL SECURITY ................................................................................................. 8 ARTICLE II THE BONDS BONDS AUTHORiZED............... ............................................ ................................ 9 TERMS OF BONDS.......... ....................................................... ........ ....................... 9 REDEMPTION ...................................................................................................... 10 FORM OF BONDS......... .......... ..................................................... ........................ 11 EXECUTION AND AUTHENTICATION OF BONDS ............................................ 11 TRANSFER OR EXCHANGE OF BONDS ........................................................... 11 BOND REGiSTER................... ..... ......................................... ................................ 12 TEMPORARY BO.NDS..... .................................. ... ... ..... ....:...................... ..... ........ 12 BONDS MUTILATED, LOST, DESTROYED OR STOLEN .................................. 12 ARTICLE III ISSUANCE OF BONDS ISSUANCE AND SALE OF BONDS ..................................................................... 13 PLEDGE OF ASSESSMENTS AND FUNDS ........................................................ 13 LIMITED OBLIGATIONS....................................................................................... 13 NO ACCELERATION.................. ................................................... ....................... 13 REFUNDING OF BONDS..................................................................................... 13 AUTHORITIES. ...................... ...................................................... ......................... 13 BOND PURCHASE AGREEMENT .................... ............ .................... ................... 14 OFFICIAL STATEMENT..... ...................................................... ...... ...................... 14 CONTINUING DISCLOSURE ........................... .................. .......................... ........ 14 BOND SALE AND DELIVERy..... .......................................................................... 14 ACTIONS APPROVED .......... .... ........................................... ................................ 14 ARTICLE IV FUNDS AND ACCOUNTS APPLICATION OF PROCEEDS OF SALE OF BONDS ....................................... 16 COSTS OF ISSUANCE FUND.................... .................. ... ............... ...................... 16 REDEMPTION FUND........................................................................................... 16 RESERVE FUND........................ .................. ........................................................ 17 IMPROVEMENT FUND... ...... ..... ....... .... .............. ..... .......... ......................... .......... 18 ARTICLE V COVENANTS COLLECTION OF ASSESSMENTS ......... ........................... ................................. 20 FORECLOSURE........... .............. ......... ........................... ............ .......................... 20 PUNCTUAL PAYMENT; COMPLIANCE WITH DOCUMENTS ............................ 21 NO PRIORITY FOR ADDITIONAL OBLIGATIONS .............................................. 21 FURTHER ASSURANCES. ........ ............... .......... ................ ........................ .... ..... 21 PRIVATE ACTIVITY BOND LIMITATION ............................................................. 21 FEDERAL GUARANTEE PROHIBITION ....... ............. ....... ........................ ........... 22 NO ARBITRAGE ................... ........ ............ .................. ... .................... ...... ............. 22 REBATE REQUIREMENT .... ....... ..... ........ ..... ... ....... ........... ........ ........ ............ ...... 22 YIELD OF THE BONDS ...... .................. ............... .............. ........ ......... .................. 22 Section 5.11. Section 5.12. Section 5.13. Section 6.01. Section 6.02. Section 6.03. Section 6.04. Section 7.01. Section 7.02. Section 7.03. Section 7.04. Section 7.05. Section 7.06. Section 7.07. Section 8.01 . Section 8.02. Section 8.03. Section 8.04. Section 8.05. Section 8.06. Section 8.07. Section 8.08. Section 8.09. Section 8.10. Section 8.11. Section 8.12. . Section 8.13. Section 8.14. Section 8.15. Section 8.16. EXHIBIT A EXHIBIT B AMENDMENT....................................................................................................... 22 MAINTENANCE OF TAX-EXEMPTION................................................................ 22 CONTINUING DISCLOSURE ............ ........ ............ ............................................... 22 ARTICLE VI INVESTMENT OF FUNDS DEPOSIT AND INVESTMENT OF MONEYS IN FUNDS ..................................... 23 ACQUISITION, DISPOSITION AND VALUATION OF INVESTMENTS............... 23 LIABILITY OF TOWN............................................................................................ 24 EMPLOYMENT OF AGENTS BY TOWN ............................................................. 25 ARTICLE VII MODIFICATION OR AMENDMENT AMENDMENTS PERMITTED ................. ................. ...................... ............... ........ 26 OWNERS' MEETINGS ......... ............ ............ .... ............................ .... ............. ........ 26 PROCEDURE FOR AMENDMENT WITH WRITTEN CONSENT OF OWNERS. .................. ........................................................................................... 26 DISQUALIFIED BONDS. ....... .......... ......................... ............................................. 27 EFFECT OF SUPPLEMENTAL RESOLUTION .................................................... 27 ENDORSEMENT OR REPLACEMENT OF BONDS ISSUED AFTER AMENDMENT. .................................................................... ....;............................. 27 AMENDATORY ENDORSEMENT OF BONDS .................................................... 28 ARTICLE VIII MISCELLANEOUS BENEFITS OF AGREEMENT LIMITED TO PARITIES ........................................ 29 SUCCESSOR AND PREDECESSOR ..................................................................29 DISCHARGE OF RESOLUTION............. ......... ..... ...................................... .......... 29 EXECUTION OF DOCUMENTS AND PROOF OF OWNERSHIP .......................30 WAIVER OF PERSONAL LIABILITY. ................................................................... 30 NOTICES AND DEMANDS ..................... ..... ................................................ .... ..... 30 PARTIAL INVALIDITY........................................................................................... 30 UNCLAIMED MONEYS. .......... ....................... ......... ....... .............................. .... ..... 31 APPLICABLE LAW................................................................................................ 31 CONFLICT WITH ACT.. ........................................................................................ 31 CONCLUSIVE EVIDENCE OF REGULARITY; VALIDITY.................................... 31 PAYMENT ON BUSINESS DAY. .......... ....... ........... ............. ............. .................... 31 REPEAL OF INCONSISTENT RESOLUTIONS ...................................................31 CONSULTANTS....... .............................................................. ............................... 31 CERTIFIED COPIES ............. .................. ....... ...... ......... .... ... ........................ ......... 31 EFFECTIVE DATE OF THE RESOLUTION ......................................................... 31 *********** TERMS AND CONDITIONS FORM OF BOND ii RESOLVED by the Town Council (the "Council") of the Town of Tiburon (the "Town"), County of Marin (the "County"), State of California, that: WHEREAS, on May 21, 2003, this Council adopted its Resolution of the Town Council of the Town of Tiburon of Intention to Make Acquisitions and Improvements," (the "Resolution of Intention") under the Municipal Improvement Act of 1913, Division 12 of the Streets and Highways Code of California, as amended and modified by other applicable laws (collectively, the "Act") to initiate proceedings under the Act in and for the Town's Lyford Cove Utility Undergrounding Assessment District (the "Assessment District"); WHEREAS, by the Resolution of Intention, the Council provided that improvement bonds as more particularly described herein (the "Bonds") would be issued thereunder and reference to the Resolution of Intention is hereby expressly made for further particulars; WHEREAS, this Council has completed its proceedings under the Resolution of Intention for the levy of assessments, has caused all recordings and filings to be completed in accordance with the requirements in and for the Assessment District and by the adoption of this Resolution intends to provide for the issuance of the Bonds; and WHEREAS, this Council now intends to provide for the issuance of the Bonds upon the. security of a the unpaid assessments, c:lll as hereinafter provided. ARTICLE I DEFINITIONS; GENERAL Section 1.01. DEFINITIONS. Unless the context otherwise requires, the terms defined in this Section shall, for all purposes of this Resolution and of any Supplemental Resolution and of the Bonds and of any certificate, opinion, request or other document herein mentioned, have the meanings herein specified. All references in this Resolution to "Articles," "Sections," and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Resolution; and the words "herein," hereof," "hereunder" and other words of similar import refer to this Resolution as a whole and not to any particular Article, Section or subdivision hereof. Words of the masculine gender shall be deemed and construed to include correlative words of the feminine and neuter genders. Unless the context shall otherwise indicate, words importing the singular number shall include the plural number and vice versa, and words importing persons shall include corporations and associations, including public bodies, as well as natural persons. "Acf means the Municipal Improvement Act of 1913, Division 12 of the Streets and Highways Code of California, as amended and modified by other applicable laws "Agenf means The Bank of New York Trust Company, N.A., designated in Section 2.01 hereof to perform the duties of authentication, registration, transfer and payment of the Bonds and the Agent's assigns or any corporation or association which may at any time be substituted in the Agent's place. "Assessment or Assessments" means the unpaid amounts of the special assessments levied against all taxable real property. within the boundaries of the Assessment District pursuant to the Act and the proceedings of the Council under the Resolution of Intention, for the purpose of paying Debt Service on the Bonds under the Bond Law. "Auditor" means the auditor/controller or tax collector of the County, or such other official of the County who is responsible for preparing real property tax bills. "Authorized Officer' means the Mayor, Town Manager, Director of Administrative Services, Town Engineer, Clerk, Town Attorney or any other officer or employee authorized by the Town Council of the Town or by an Authorized Officer to undertake the action referenced in this Resolution as required to be undertaken by an Authorized Officer. "Available Surplus Funds" means any surplus moneys held by the Town at the end of each Fiscal Year in excess of the amounts required to pay lawful municipal obligations incurred in that Fiscal Year. "Bond' or "Bonds" means "Limited Obligation Improvement Bonds, Town of Tiburon, Lyford Cove Utility Undergrounding Assessment District," issued under this Resolution and the Act, and at any time Outstanding in substantially the form in Exhibit B attached. "Bond Date" means the dated date of the Bonds specified in Exhibit A attached hereto and made a part hereof. "Bond Denomination" means the amount of $5,000 or any integral multiple thereof, which is the minimum amount in which the Bonds may be issued, except that one Bond may contain any odd amount. - 2- "Bond Law' means the Improvement Bond Act of 1915, Division 10 of the California Streets and Highways Code. "Bond Purchase Agreemenf means the agreement between the Town and the Original Purchaser for the sale and purchase of the Bonds. "Bond Register' means the books maintained by the Agent pursuant to Section 2.07 for the registration and transfer of ownership of the Bonds. "Bond Year' means the twelve-month period beginning on September 2 in each year and ending on the day prior to September 2 in the following year except that (i) the first Bond Year shall begin on the Closing Date and end on the day prior to the next September 2, and (ii) the last Bond Year may end on a prior redemption date. "Business DaY' means any day other than (i) a Saturday or a Sunday or (ii) a day on which banking institutions in the state in which the Agent has its Principal Office are authorized or obligated by law or executive order to be closed. "Capitalized Interest Accounf means the account of that name in the Redemption Fund. "ClerK means the Town Clerk of the Town or Deputy Town Clerk or designee' thereof. "Closing Date" means the date upon which there is an exchange of any of the Bonds for the proceeds representing the purchase price of such Bonds by the Original Purchaser thereof. ~ Continuing Disclosure Certificate" means any such certificate provided under Section 5.13 hereof. "Costs of Issuance" means all expenses incurred in connection with the authorization, issuance, sale and delivery of the Bonds, including but not limited to compensation, fees and expenses of the Town and the Agent and their respective counsel, compensation to any financial consultants, engineers, accountants, verification agents, and underwriters (other than those taken as discount on the Closing Date), legal fees and expenses, filing and recording costs, costs of preparation and reproduction of notice of sale documents and other related bond issuance costs, rating agency costs, costs of compliance with the Tax Code relating to any rebate to the United States and continuing disclosures and the costs of printing, mailing and publication of notices with respect to the Town. "Costs of Issuance Fund' means the fund designated "Town of Tiburon, Limited Obligation Improvement Bonds, Lyford Cove Utility Undergrounding Assessment District, Costs of Issuance Fund established under Section 4.02 hereof. "Councif means the Town Council as the legislative body of the Town. "County" means the County of Marin, State of California. "Debt Service" means, for each Bond Year, the sum of (i) the interest due on the Outstanding Bonds in such Bond Year, assuming that the Outstanding Bonds are retired as - 3- scheduled, and (ii) the principal amount of the Outstanding Bonds and the Sinking Fund Payments due in such Bond Year. "Fair Market Value" means the price at which a willing buyer would purchase the investment from a willing seller in a bona fide, arm's length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the investment is traded on an established securities market (within the meaning of section 1273 of the Tax Code) and, otherwise, the term "Fair Market Value" means the acquisition price in a bona fide arm's length transaction (as referenced above) if (i) the investment is a certificate of deposit that is acquired in accordance with applicable regulations under the Tax Code, (ii) the investment is an agreement with specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for example, a guara,nteed investment contract, a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Tax Code, (Hi) the investment is a United States Treasury Security--State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt, or (iv) any commingled investment fund in which the Town and related parties do not own more than a ten percent (100~) beneficial interest if the return paid by such fund is without regard to the source of the investment. "Federal Securities" means any of the following which at the time of investment are legal investments under the laws of the State for the moneys proposed to be invested therein: (a) direct general obligations of the United States of America (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America); and . (b) obligations of any department, agency or instrumentality of the United States of America the timely payment of principal of and interest on which are unconditionally and fully guaranteed by the United States of America. "Director of Administrative Services" means the Director of Administrative Services or chief financial officer of the Town or designee thereof, including any deputy thereof or assistant thereto. . "Fiscal Yeat" means the period commencing on July 1 of each year and ending on the next succeeding June 30. . "Improvement Fund' means the fund designated "Town of Tiburon, Limited Obligation Improvement Bonds, Lyford Cove Utility Undergrounding Assessment District, II established under Section 4.05 hereof. "Information Services" means Financial Information, Inc.'s "Daily Called Bond Service," 30 Montgomery Street, 10th Floor, Jersey City, New Jersey 07302, Attention: Editor; F.S. Mergent call Notification, 5250 77 Center Drive, Charlotte, NC 28217; Xcitek, 5 Hanover Square, New York, NY 10004; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such services providing information with respect to called bonds as the Town may designate in an Officer's Certificate delivered to the Agent. "Interest Payment Date" means each date upon which interest on the Bonds is payable semiannually on each March 2 and September 2 until maturity and beginning on the date specified in Exhibit A. -4- "Officers Certificate" means a written certificate or similar document executed by an Authorized Officer on behalf of the Town. "Original Purchaser' means Wulff, Hansen & Co., as the first purchaser of the Bonds from the Town. "Outstanding," when used as of any particular time with reference to Bonds, means all Bonds theretofore executed, issued and delivered by the Town and authenticated by the Agent under this Resolution except: (a) Bonds theretofore canceled by the Agent or surrendered to the Agent for cancellation; (b) Bonds paid or deemed to have been paid within the meaning of Section 2.03; and (c) Bonds in lieu of or in substitution for which other Bonds shall have been executed, issued and delivered by the Town pursuant to this Resolution or any Supplemental Resolution. "Owner' or "Registered Owner," when used with respect to any Outstanding Bond, means the person in whose name the ownership of such Bond shall be registered on the Bond Register. . "Participating Underwriter' means an underwriter or purchaser of the Bonds under the Continuing Disclosure Certificate. "Permitted Investments" means the following, but only to the extent that the same are acquired at Fair Market Value: (a) Federal Securities; (b) securities (other than those identified in paragraphs (a) and (d) of Section 53601 of the Government Code of the State) in which the Town may legally invest funds subject to its control, pursuant to Article 1, commencing with Section 53600, of Chapter 4 of Part 1 of Division 2 of Title 5 of the Government Code of the State, as now or hereafter amended; (c) shares in a California common law trust established pursuant to Title 1, Division 7, Chapter 5 of the California Government Code which invests exclusively in investments permitted by Section 53635 of Title 5, Division 2, Chapter 4 of the California Government Code, as it may be amended, including but not limited to the California Asset Management Program (CAMP); (d) the Local Agency Investment Fund of the State of California, created pursuant to Section 16429.1 of the California Government Code, to the extent the Director of Administrative Services is authorized to register such investment in the Town's name; (e) investment agreements or guaranteed investment contracts, with or guaranteed by a financial entity whose long-term unsecured obligations are rated "AA" - 5- or better by Moody's Investor's Service ("Moody's) and Standard and Poor's Ratings Group ("S&P"), and whose short term debt is rated no lower than the corresponding level of rating category for such debt and such agreement or contract shall provide that the financial entity shall deposit collateral with a third party in accordance with criteria established by Moody's and S&P in the event that the rating of short or long-term debt of the entity is downgraded below then-current requirements of Moody's and S&P for such agreements or contracts; (f) money market funds which are rated Am or better by S&P; (g) any of the following direct or indirect obligations of the following agencies of the United States of America: (i) direct obligations of the Export-Import Bank; (ii) certificates of beneficial ownership issued by the Farmers Home Administration; (iii) participation certificates issued by the General Services Administration; (iv) mortgage- backed bonds or pass-through obligations issued and guaranteed by the Government National Mortgage Association, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation or the Federal Housing Administration; (v) project notes issued by the United States Department of Housing and Urban Development; and (vi) public housing notes and bonds guaranteed by the United States of America; (h) interest-bearing demand or time deposits (including certificates of deposit) in federal or state chartered savings and loan associations or in federal or State of California banks (including the Agent), provided that (i) the unsecured short-term obligations of such commercial bank or savings and loan association shaH be rated A 1 or better by S&P, or (ii) such demand or time deposits shall be fully insured by the Federal Deposit Insurance Corporation; (i) commercial paper rated in the highest short-term rating category by S&P, issued by corporations which are organized and operating within the United States of America, and which matures not more than 180 days following the date of investment therein; U) bankers acceptances, consisting of bills of exchange or time drafts drawn on and accepted by a commercial bank whose short-term obligations are rated in the highest short-term rating category by S&P, which mature not more than 270 days following the date of investment therein; (k) obligations the interest on which is excludable from gross income pursuant to Section 103 of the Tax Code and which are rated A or better by S&P. "Prepayment Account' means the account of that name in the Redemption Fund. "Principal Amount' means the maximum aggregate principal amount of the Bonds as forth in Exhibit A. "Principal Office" means the office of the Agent in San Francisco, California, or such other office as shall be designated by the Agent in writing to the Town, or such other office of the Agent designated by the Agent for payment, transfer or exchange of the Bonds. "Project' means, collectively, the acquisitions and improvements described in the Resolution of Intention and funded with all or a portion of the proceeds of the Bonds. - 6 - "Record Date" means, with respect to the Bonds, the fifteenth (15th) day of the , calendar month immediately preceding an Interest Payment Date, whether or not a Business Day. "Redemption Fund' means the fund designated "Town of Tiburon, Limited Obligation Improvement Bonds, Lyford Cove Utility Undergrounding Assessment District, Redemption Fund" established under Section 4.03 hereof. "Redemption Premium" means the percentage of the principal amount of the Bonds payable upon redemption of the Bonds, as set forth in Exhibit A hereto. "Reserve Fund' means the fund designated "Town of Tiburon, Limited Obligation Improvement Bond, Lyford Cove Utility Undergrounding Assessment District, Reserve Fund" established under Section 4.04 hereof. "Reserve Requirement" means as of any date of calculation, an amount not to exceed the lesser of (a) Maximum Annual Debt Service on the Outstanding Bonds or (b) ten percent (100.10) of the total of the proceeds of the Bonds deposited under Section 4.01 hereof. "Resolution" or "Resolution of Issuance" means this Resolution, as originally adopted or as it may from time to time be supplemented, modified or amended by any Supplemental Resolution pursuant to the "provisions hereof. "Resolution of Intention" means Resolution No. 15-2003 "A Resolution of the Town Council of the Town of Tiburon of Intention to Make Acquisitions and Improvements," adopted by the Council on May 21,2003. "Sinking Fund Payments" means amounts specified in Exhibit A to be paid by the Town with respect to any Term Bonds, as set forth in Exhibit A. "State" means the State of California. "Supplemental Resolution" means any resolution, agreement, resolution or other instrument hereafter duly adopted or executed by the Town in accordance with the provisions of this Resolution. "Tax Code" means the Internal Revenue Code of 1986 as in effect on the date of issuance of the Bonds or (except as otherwise referenced herein) as it may be amended to apply to . obligations issued on the date of issuance of the Bonds, together with applicable proposed, temporary and final regulations promulgated, and applicable official public guidance published, under the Tax Code. "Term Bonds" means those Bonds identified as Term Bonds in Exhibit A. "Town" means the Town of Tiburon a municipal corporation and general law town of the State of California duly organized and validly existing under and by virtue of the Constitution and the laws of the State of California. "Town Attorney" means the duly appointed or retained attorney or firm of attorneys to the Town for purposes of rendering advice in the conduct of its general municipal affairs. - 7 - "Town Manager' means the Town Manager or the Assistant Town Manager of the , Town. "Treasurer' means the official who is the elected Town treasurer, or the deputy or designee thereof, or which official may be the Director of Administrative Services. Section 1.02. UNPAID ASSESSMENTS. The Assessments are hereby finally confirmed as shown .on the list of unpaid Assessments on file with the Director of Administrative Services which list is hereby approved and which is incorporated herein by this reference and made a part hereof. For a particular description of the lots or parcels of land bearing the respective assessment numbers set forth in the list, reference is hereby made to the assessment and to the diagram, and any amendments thereto, recorded in the office of the officer of the Town who is the Superintendent of Streets of the Town after confirmation thereof by the Council. Section 1.03. EQUAL SECURITY. In consideration of the acceptance of the Bonds by the Owners thereof, this Resolution shall be deemed to be and shall constitute a contract between the Town and the Owners from time to time of the Bonds; and the covenants and agreements herein set forth to be performed on behalf of the Town shall be for the equal and proportionate benefit, security and protection of all Owners of the Bonds without preference, priority or distinction as to security or otherwise of any of the Bonds over any of the others by reason of the number or date thereof or the time of sale, execution or delivery thereof, or otherwise for any cause whatsoever, except as expressly provided therein or herein. - 8- ARTICLE II THE BONDS Section 2.01. BONDS AUTHORIZED. All acts, conditions and things required by law to exist, happen and be performed precedent to and in the issuance of the Bonds have existed, happened and been performed in due time, form and manner as required by law, and the Council is now authorized pursuant to each and every requirement of law to issue the Bonds in the manner and form as provided in this Resolution. The Bonds in the Principal Amount are hereby authorized and will be issued as serial and/or term bonds as set forth in Exhibit A hereto. The Agent, at the Principal Office, is hereby designated as the Agent to perform the actions and duties required under this Resolution for the authentication, transfer, registration, and payment of the Bonds. Section 2.02. TERMS OF BONDS. (A) Denominations. The Bonds shall be issued as fully registered Bonds without coupons in the Bond Denomination or any integral multiple thereof, except that the first maturity may contain any odd amount. Bonds shall be lettered and numbered in a customary manner as determined by the Agent. (B) Date of Bonds. The Bonds shall be dated the Bond Date. (C) CUSIP. "CUSIP" identification numbers shall be imprinted on the. Bonds, but such numbers shall not constitute a part of the contract evidenced by the Bonds and any error or omission with respect thereto shall not constitute cause for refusal of any purchaser to accept delivery of and pay for the Bonds. Failure of the Town or the Agent to use such CUSIP numbers in any notice to Owners shall not constitute an event of default or any violation of the Town's contract with such Owners and shall not impair the effectiveness of any such notice. (D) Series and Maturities. The Bonds shall consist of the series and mature and become payable on September 2 of each year and shall bear interest at the rates per annum all as set forth in Exhibit A hereto and hereby made a part hereof. (E) Interest. The Bonds shall bear interest at the rates set forth above payable on the Interest Payment Dates in each year. Interest shall be calculated on the basis of a 360-day year composed of twelve 30-day months. Each Bond shall bear interest from the Interest Payment Date next preceding the date of authentication and registration thereof unless it is authenticated and registered (i) prior to an Interest Payment Date and after the close of business of the Record Date, in which event it shall bear interest from such Interest Payment Date, or (ii) prior to the close of business on the Record Date preceding the first Interest Payment Date, in which event it shall bear interest from the Dated Date. (F) Method of Payment. Both the principal of and interest and premium (if any) on the Bonds shall be payable in lawful money of the United States of America. Interest on the Bonds (including the final interest payment upon maturity or earlier redemption) is payable by check of the Agent mailed by first class mail to the registered Owner thereof at such registered Owner's address as it appears on the registration books maintained by the Agent at the close of business on the Record Date preceding the Interest Payment Date, or by wire transfer made on such Interest Payment Date upon written instructions of any Owner of $1,000,000 or more in aggregate principal amount of Bonds delivered to the Agent prior to the applicable Record -9- Date. The principal of the Bonds and any premium on the Bonds are payable in lawful money , of the United States of America upon surrender of the Bonds at the Principal Office of the Agent. All Bonds paid by the Agent pursuant this Section shall be canceled by the Agent. The Agent shall destroy the canceled Bonds and, upon request of the Town, issue a certificate of destruction of such Bonds to the Town. Section 2.03. REDEMPTION. (A) General. The Bonds are subject to redemption from the sources, upon the terms, the amounts, on the dates and at the Redemption Premiums as set forth in Exhibit A hereto and hereby made a part hereof. (B) Notice to Agent. For other than redemption of any Term Bonds, the Town shall give the Agent written notice of the aggregate amount of Bonds expected to be redeemed pursuant to subsection (A) not less than sixty (60) days prior to the applicable redemption date. (C) Redemption Procedure by Agent. (i) Selection of Bonds. Except for redemption of any Term Bonds, the Agent shall select Bonds for retirement in such a way that the ratio of Outstanding Bonds to issued Bonds shall be approximately the same in each annual series insofar as possible. Within each annual series the Agent shall select Bonds for retirement by lot. (ii) Notice by Agent. The Agent shall cause written notice of any redemption to be given by registered or certified mail or by personal service to the respective registered Owners of any Bonds designated for redemption, at their addresses appearing on the Bond Register in the Principal Office of the Agent at least 30 days before the applicable Interest Payment Date. The Agent shall also cause notice of redemption to be sent to one or more of the Information Services at least one day earlier than the giving of notice to the Owners as aforesaid; provided, however, such mailing to the Information Services shall not be a condition precedent to such redemption. Failure to so mail any notice of redemption, or of any person or entity to _ receive any such notice, or any defect in any notice of redemption, shall not affect the validity of the proceeding for the redemption of such Bonds. Such notice shall state the redemption date and the Redemption Premium and, if less than all of the then Outstanding Bonds are to be called for redemption, shall designate the GUSIP numbers (if applicable) and Bond numbers of the Bonds to be redeemed by giving the individual GUSIP number and Bond number of each Bond to be redeemed or shall state that all Bonds between two stated Bond numbers, both inclusive, are to be redeemed or that all of the Bonds of one or more maturities have been called for redemption, shall state as to any Bond called in part the principal amount thereof to be redeemed, and shall require that such Bonds be then surrendered at the Principal Office of the Agent for redemption at the said redemption price, and shall state that further interest on such Bonds, or the portion thereof to be redeemed, will not accrue from and after the redemption date. . (iii) Payment. Upon the payment of the redemption price of Bonds being redeemed, each check or other transfer of funds issued for such purpose shall, to the extent practicable, bear the GUSIP number identifying, by issue and maturity, the Bonds being redeemed with the proceeds of such check or other transfer. - 10- (iv) Partial Redemption. Upon surrender of Bonds redeemed in part only, the Town shall execute and the Agent shall authenticate and deliver to the registered Owner, at the expense of the Town, a new Bond or Bonds, of the same series and maturity, of authorized denominations in aggregate principal amount equal to the unredeemed portion of the Bond or Bonds. (0) Effect of Redemption. From and after the date fixed for redemption, if funds available for the payment of the principal of, and interest and any premium on, the Bonds so called for redemption shall have been deposited in the Redemption Fund on the date fixed for redemption, such Bonds so called shall cease to be entitled to any benefit under this Resolution other than the right to receive payment of the redemption price, and no interest shall accrue thereon on or after the redemption date specified in such notice. All Bonds redeemed by the Agent pursuant to this Section 2.03 sh~1I be canceled by the Agent. The Agent shall destroy the canceled Bonds and, upon request of the Authority, issue a certificate of destruction of such Bonds to the Town. Section 2.04. FORM OF BONDS. The Bonds, the Agent's certificate of authentication and the assignment, to appear thereon, shall be substantially in the forms, respectively, set forth in Exhibit B attached hereto and by this reference incorporated herein, with necessary or appropriate variations, omissions and insertions, as permitted or required by this Resolution and the Act. The Bonds are being issued in fully registered form as physical certificates and I when issued, will be eligible for registration with the Depository Trust Company, New York, New York ("DTC"), however, at closing, unless issued as a temporary Bond hereunder, the Bonds will not be issued in "book-entry-only" form. . Section 2.05. EXECUTION AND AUTHENTICATION OF BONDS.. The Bonds shall be executed in the name and c;>n behalf of the Town with the manual or facsimile signatures of the Treasurer and attested by the manual or facsimile signature of the Clerk. The Bonds shall then be delivered to the Agent for authentication. In case any officer who shall have signed any of the Bonds shall cease to be such officer before the Bonds so signed shall have been authenticated or delivered by the Agent or issued by the Town, such Bonds may nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and issue, shall be as binding upon the Town as though the individual who signed the same had continued to be such officer of the Town. Also, any Bond may be signed on behalf of the Town by any individual who on the actual date of the execution of such Bond shall be the proper officer although on the nominal date of such Bond such individual shall not have been such officer. Only such of the Bonds as shall bear thereon a certificate of authentication in substantially the form set forth in Exhibit B, manually executed by the Agent, shall be valid or obligatory for any purpose or entitled to the benefits of this Resolution, and such certificate of the Agent shall be conclusive evidence that the Bonds so authenticated have been duly authenticated and delivered hereunder and are entitled to the benefits of this Resolution. The Agent's certificate of authentication on any Bonds shall be deemed to be executed by it if signed by the Agent or by an authorized officer or signatory of the Agent, but it shall not be necessary that the same officer or signatory sign the certificate of authentication on all of the Bonds issued hereunder. Section 2.06. TRANSFER OR EXCHANGE OF BONDS. Any Bond may, in accordance with its terms, be transferred upon the Bond Register by the registered Owner, in person or by such Owner's duly authorized attorney, upon surrender of such Bond for cancellation, accompanied by delivery of a written instrument of transfer in a form approved by the Agent, - 11 - duly executed. Whenever any Bond shall be surrendered for transfer, the Agent shall thereupon authenticate and deliver to the transferee a new Bond or Bonds of like tenor, maturity and aggregate principal amount. Bonds may be exchanged at the Principal Office of the Agent, for Bonds of the same tenor and maturity and of other authorized denominations. No Bonds the notice of redemption of which has been given under Section 2.03 shall be subject to transfer or exchange pursuant to this Section. Neither the Town nor the Agent shall be required to make such exchange or registration or transfer of Bonds on or after the Record Date or after a Bond has been selected for redemption. For any transfer or exchange under this Section, the Town and the Agent may require the payment of a reasonable fee to cover the costs and expenses of the Town and the Agent. Section 2.07. BOND REGISTER. The Agent will keep or cause to be kept at its Principal Office a sufficient Bond Register for the registr.ation and transfer of the Bonds, which shall at all times during regular business hours be open to inspection by the Town; and, upon presentation for such purpose, the Agent shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on the Bond Register, Bonds as provided in this Resolution. Section 2.08. TEMPORARY BONDS. The Bonds may be issued initially in temporary form exchangeable for definitive Bonds when ready for delivery. The temporary Bonds may be printed, lithographed or typewritten, shall be of such denominations as may be determined by the Council and may contain such reference to any of the provisions of this Resolution as may be appropriate. Every temporary Bond shall be executed by the officers designated and in the manner provided in Section 2.05. hereof and be registered and authenticated by the Agent upon the same conditions and in substantially the same manner as the definitive Bonds. If the Town issues temporary Bonds, it will execute and furnish definitive Bonds without delay, and thereupon the temporary Bonds may be surrendered, for cancellation, in exchange therefor at the Principal Office of the Agent, and the Agent shall authenticate and deliver in exchange for . such temporary Bonds an equal aggregate principal amount of definitive Bonds of authorized denominations. Until so exchanged, the temporary Bonds shall be entitled to the same benefits under this Resolution as definitive Bonds authenticated and delivered hereunder. Section 2.09. BONDS MUTILATED, LOST, DESTROYED OR STOLEN. If any Bond shall become mutilated, the Agent shall thereupon authenticate and deliver, a new Bond of like maturity and principal amount in exchange and substitution for the B.ond so mutilated, but only upon surrender to the Agent of the Bond so mutilated. Every mutilated Bond so surrendered to the Agent shall be canceled by it and delivered to, or upon the order of, the Town. If any Bond issued hereunder shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Town and the Agent and, if such evidence be satisfactory to them and indemnity satisfactory to them shall be given, the Agent shall thereupon authenticate and deliver, a new Bond of like maturity and principal amount in lieu of and in substitution for the Bond so lost, destroyed or stolen (or if any such Bond shall have matured or shall have been called for redemption, instead of issuing a substitute Bond the Agent may pay the same without surrender thereof upon receipt of indemnity satisfactory to the Agent). The Town and the Agent may require payment of a reasonable fee for each new Bond issued under this Section and of the expenses which may be incurred by the Town and the Agent. Any Bond issued under the provisions of this Section in lieu of any Bond alleged to be lost, destroyed or stolen shall constitute an original contractual obligation on the part of the Town whether or not the Bond alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and shall be equally and proportionately entitled to the benefits of this Resolution with all other Bonds secured by this Resolution and any Supplemental Resolution. -12- ARTICLE III ISSUANCE OF BONDS Section 3.01. ISSUANCE AND SALE OF BONDS. At any time after the adoption of this Resolution, the Town may issue the Bonds and sell and deliver them to the Original Purchaser under the Bond Purchase Agreement between the Town and Original Purchaser. The Authorized Officers, and each of them, are hereby authorized to negotiate and execute the Bond Purchase Agreement with the Original Purchaser for the sale of the Bonds, subject to such conditions as shall be as hereafter provided. Section 3.02. PLEDGE OF ASSESSMENTS AND FUNDS. The Bonds shall be secured by a first pledge (which pledge shall be effected in the manner and to the extent herein provided) of all of the Assessments and all moneys deposited in the Redemption Fund (and the Prepayment Account therein) and the Reserve Fund. The Assessments and all moneys deposited into said funds (except as otherwise provided herein) are hereby dedicated to the payment of the principal of (including any Sinking Fund Payments), and interest and any premium on, the Bonds as provided herein and in the Bond Law until all of the Bonds have been paid and retired or until moneys or Federal Securities have been set aside irrevocably for that purpose in under Section 8.03 hereof. Section 3.03. LIMITED OBLIGATIONS. All obligations of the Town under this Resolution and the Bonds shall not be general obligations of the Town, but shall be limited obligations, payable solely from the Assessments and the funds pledged therefore hereunder. Neither the faith and credit of the Town nor of the State of California or any political subdivision thereof is pledged to the payment of the Bonds. The Bonds are "Limited Obligation Improvement Bonds" under section 8769 of the Bond Law and are payable solely from and secured solely by the Assessments and the amounts in the Redemption Fund and the Reserve Fund created hereunder. Notwithstanding any other provision of this Resolution, the Town is not obligated to advance available surplus funds from the Town treasury to cure any deficiency in the Redemption Fund; provided, however, the Town is not prevented, in its sole discretion, from so advancing funds. Section 3.04. NO ACCELERATION. The principal of the Bonds shall not be subject to acceleration hereunder. Nothing in this Section 3.04 shall in any way prohibit the prepayment or redemption of Bonds under Section 2.03 hereof, or the defeasance of the Bonds and discharge of this Resolution under Section 8.03 hereof. Section 3.05. REFUNDING OF BONDS. The Bonds may be refunded by the Town pursuant to Divisions 11 or 11.5 of the California Streets and Highways Code upon the conditions as set forth in appropriate proceedings. This Section shall not apply to or in any manner limit advancement of the maturity of any of the Bonds as provided in Parts 8, 9, 11, or 11.1 of the Bond Law, nor shall this Section 3.05 apply to or in any manner limit the redemption and payment of any Bond pursuant to subsequent proceedings providing for the payment of amounts to eliminate previously imposed fixed lien assessments, including the Assessments. Section 3.06. AUTHORITIES. The Authorized Officers are hereby authorized and directed to cause the various documents herein mentioned to be completed and executed with such changes, modifications, deletions or additions as may be approval by the Authorized Officer in consultation with the Town's staff and consultants with respect to these reassessment -13- proceedings, such approval to be conclusively evidenced by the execution of the such , documents by the Authorized Officer. The foregoing authorization is expressly conditioned upon the satisfaction of the following: (i) the total principal amount of the Bonds shall not exceed $4,000,000; (ii) the average interest rate of the Bonds shall not exceed 60/0 per annum and the discount shall not exceed 2.50/0 of the Principal Amount. The Clerk is authorized to complete and to approve changes in any provisions of this Resolution and Exhibits A and B hereto in order to accomplish the delivery of any of the Bonds on schedule; such changes may be accomplished by attachment of a certificate, executed by the Clerk, to this Resolution on file in the office of the Clerk. Section 3.07. BOND PURCHASE AGREEMENT. The Council hereby approves the Bond Purchase Agreement in substantially the form on file with the Town and the Authorized Officer is hereby authorized and directed to complete and execute the Bond Purchase Agreement on behalf of the Town with such changes, additions, deletions and revisions as may be approved by the Authorized Officer in consultation with the Original Purchaser and Bond Counsel. Section 3.08. OFFICIAL STATEMENT. The Council hereby approves the Official Statement describing the financing for the Bonds, in substantially the form on file with the Town Clerk together with any changes therein or additions thereto deemed advisable by the Authorized Officer. The Council approves and authorizes the distribution by the Original Purchaser (as underwriter) of the Preliminary Official Statement to prospective purchasers of the Bonds, and authorizes and directs the Authorized Officer on behalf of the Town to deem "final," pursuant to Rule 15c2-12 under the Securities Exchange Act of 1934 (the IIRule"), the Preliminary Official Statement prior to its distribution to prospective purchasers of the Bonds. The execution of the final Official Statement, which shall include such changes and additions to the Preliminary Official Statement as may be permitted by the Rule and deemed advisable by the Authorized Officer and such information permitted to be excluded from the Preliminary Official Statement pursuant to the Rule shall be conclusive evidence of the approval of the Official Statement by the Town. Section 3.09. CONTINUING DISCLOSURE. The Council hereby approves the form of the Town's Continuing Disclosure Certificate with respect to the Bonds in substantially the forms thereof attached to the Preliminary Official Statement. The Authorized Officer is hereby authorized and directed to complete and execute the Certificate on behalf of the Town with such changes, additions, deletions as may be approved by the Authorized Officer in consultation with Bond Counsel. Section 3.10. BOND SALE AND DELIVERY.. Upon execution of the Bond Purchase Agreement by the Town, the Bonds shall be prepared, authenticated and delivered, all in accordance with the applicable terms of this Resolution and the Bond Purchase Agreement. Each Authorized Officer and other responsible Town officials are hereby authorized and directed to take such actions as are required under the Bond Purchase Agreement to complete all actions required to evidence the delivery of the Bonds and the receipt of the purchase price thereof from the Original Purchaser. Section 3.11. ACTIONS APPROVED. All actions heretofore taken by each Authorized Officer and other officials and agents of the Town with respect to the establishment of the Assessment District and the sale and issuance of the Bonds are hereby approved, confirmed and ratified, and each Authorized Officer is hereby authorized and directed to do any and all things and take any and all actions and execute any and all certificates, agreements, contracts, and other documents, which each Authorized Officer may deem necessary or advisable in order - 14- to complete the lawful issuance and delivery of the Bonds in accordance with this Resolution and any certificate, agreement, contract, and other document described in the documents herein approved. Each Authorized Officer is further authorized and directed to complete Exhibit A hereto and make such changes, amendments and corrections to this resolution as may be required to provide for the timely issuance, sale and delivery of the Bonds and to certify to such actions, as required. -15- ARTICLE IV FUNDS AND ACCOUNTS Section 4.01. APPLICATION OF PROCEEDS OF SALE OF BONDS. Upon receipt of the proceeds of sale of the Bonds on the Closing Date, the proceeds thereof shall be forthwith set aside, paid over and deposited by the Director of Administrative Services, as set forth in appropriate Officer's Certificate(s), Article IV hereof and Exhibit A hereto. Section 4.02. COSTS OF ISSUANCE FUND. (A) Establishment of Costs of Issuance Fund. The Costs of Issuance Fund shall be established, held and receive deposits, all as provided in Exhibit A. The moneys in the Costs of Issuance Fund shall be held by the Director of Administrative Services for the benefit of the Town and shall be disbursed as provided in subsection (B) of this Section 4.02 for the payment or reimbursement of the Costs of Issuance. (B) Disbursement. Amounts in the Costs of Issuance Fund shall be disbursed from time to time to pay Costs of Issuance as set forth in a requisition therefor containing respective amounts to be paid to the designated payees and delivered to the Director of Administrative Services concurrently with the delivery of the Bonds. The Director of Administrative Services shall pay all Costs of Issuance upon receipt of an invoice from any such payee which requests payment in an amount which is less than or equal to the amount set forth with respect to such payee in such requisition, or upon receipt of an Officer's Certificate requesting payment of a Cost of Issuance not listed on the initial requisition delivered to the Director of Administrative Services on the Closing Date. (C) ,Investment. Moneys in the Costs of Issuance Fund shall be invested and deposited under Section 6.01 hereof. Pending its closing under Subsection (D)below, Interest earnings and profits resulting from such investment shall be retained by the Director of Administrative Services in the Costs of Issuance Fund to be used for the purposes of such fund, pending the closing of such fund. (D) Closing of Fund. The Director of Administrative Services shall maintain the Costs of Issuance Fund for a period of 90 days from the Closing Date or until the last known Costs of Issuance have been paid, whichever is earlier, and then shall transfer any moneys remaining therein, including any investment earnings thereon, the Improvement Fund and the Costs of Issuance Fund shall be closed. Section 4.03. REDEMPTION FUND. (A) Establishment of Redemption Fund and Account. The Redemption Fund is hereby established as a separate fund to be held by the Director of Administrative Services to the credit of which deposits shall be made as required by Section 4.01 and any other amounts required to be deposited therein by this Resolution or the Bond Law. Moneys in the Redemption Fund shall be held by the Director of Administrative Services for the benefit of the Town and the Bond Owners, shall be disbursed for the payment of the principal of, and interest and any premium on, the Bonds as provided below. Within the Redemption Fund, the Director of Administrative Services shall establish and administer accounts as follows: -16- (i) The Capitalized Interest Account, into which a deposit shall be made under Section 4.01 and from which, disbursements shall be made to pay all or a portion of the interest on the Bonds which is due on the Interest Payment Date( s) set forth in Exhibit A. Upon the final payment of interest as herein provided, any moneys remaining in the Capitalized Interest Account shall be transferred to the Redemption Fund to pay Debt Service and the Capitalized Interest Account shall be closed; and (ii) The Prepayment Account, into which shall be placed any amounts representing the full or partial prepayments of Assessments that occur after the issuance of the Bonds. The Prepayment Account shall be administered in accordance with section' 8767 of the Bond Law and shall remain open so long as the Redemption Fund remains open. (B) Disbursements. On or before each Interest Payment Date, the Director of Administrative Services shall withdraw from the accounts in the Redemption Fund and forward to the Agent for payment to the Owners of the Bonds, amounts sufficient to pay the principal of, and interest and any premium, then due and payable on the Bonds. Five (5) Business Days prior to each Interest Payment Date, the Director of Administrative Services shall determine if the amounts then on deposit in the Redemption Fund are sufficient to pay the Debt Service due on the Bonds on such Interest Payment date. In the event that amounts in the Redemption Fund are insufficient for such purpose, the Director of Administrative Services shall cause appropriate withdrawalsto be made from the Reserve Fund, to the extent of any funds therein, the amount of such insufficiency, and shall transfer any amounts so withdrawn to the Redemption Fund. Amounts so withdrawn from such reserve fund and deposited in the Redemption Fund shall be applied to the payment of the Bonds. If, after the foregoing transfers, there are insufficient funds in the Redemption Fund to make the payments provided for in the first sentence of the first paragraph of this Section 4.03(B), the Director of Administrative Services shall apply the available funds first to the payment of interest on the Bonds, then to the payment of principal due on the Bonds, and then to payment of principal due on the Bonds by reason of Bonds called for redemption pursuant to Section 2.03 hereof. (C) Investment. Moneys in the Redemption Fund and the accounts therein shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits resulting from such investment and deposit shall be retained in the Redemption Fund and the accounts therein. (D) Closing of Fund. The Redemption Fund (and the Prepayment Account therein) shall be closed when all of the principal of and interest on the Bonds has been paid. Section 4.04. RESERVE FUND. (A) Establishment of Reserve Fund. The Reserve Fund is hereby established as a separate fund to be held by the Director of Administrative Services to the credit of which a deposit shall be made as required by Section 4.01, and deposits shall be made as provided in the Bond Law. Moneys in the Reserve Fund shall be held by the Director of Administrative Services for the benefit of the Town and the Bond Owners as a reserve for the payment of principal of, and interest and any premium on, the Bonds. The Town shall cause the Reserve Fund to be administered in accordance with Part 16 of the Bond Law; provided that proceeds from redemption or sale of properties with respect to which payment of delinquent Assessments and interest thereon was made from the Reserve Fund, shall be credited to the Reserve Fund. - 17 - (B) Use of Fund. Except as otherwise provided in this Section 4.04 all amounts , deposited in the Reserve Fund shall be used and withdrawn by the Director of Administrative Services solely for the purpose of making transfers to the Redemption Fund in the event of any deficiency at any time in the Redemption Fund of the amount then required for payment of the principal of, and interest and any premium on, the Bonds or, in accordance with the provisions of this Section 4.04, for the purpose of redeeming Bonds from the Redemption Fund. (C) Transfer Due to Deficiency in Redemption Fund. Transfers shall be made from the Reserve Fund to the Redemption Fund in the event of a deficiency in the Redemption Fund, in accordance with Section 4.04(B) hereof. (D) Payment of Assessments. Whenever, after the issuance of the Bonds, an Assessment is pre-paid, in whole or in part, as provided in the Bond Law, the Director of Administrative Services shall transfer from the Reserve Fund to the Redemption Fund an amount specified in such direction equal to the product of the ratio of the original amount of the Assessment securing any Bonds so paid to the original amount of all Assessments securing any Bonds, times the initial Reserve Requirement. (E) Transfer of Excess of Reserve Requirement. Whenever, on any Interest Payment Date, or on any other date as determined by the Director of Administrative Services, the amount in the Reserve Fund exceeds the then applicable Reserve Requirement, the Director of Administrative Services shall, except as otherwise provided in Section 5.09 hereof for purposes of rebate and as evidenced by an appropriate Officer's Certificate, transfer on or before such Interest Payment Dat~ an amount equal to the excess from the Reserve Fund to the Redemption Fund to be used in accordance with Part 16 of the Bond Law. (F) Transfer When Balance Exceeds Outstanding Bonds. Whenever the balance in the Reserve Fund is sufficient to retire all the Outstanding Bonds, whether by advance retirement or otherwise, collection of the principal and interest on the Assessments shall be discontinued and the Reserve Fund liquidated by the Director of Administrative Services in retirement of the Outstanding Bonds, as directed by an Officer's Certificate. In the event that the balance in the Reserve Fund at the time of liquidation exceeds the amount required to retire all of the Outstanding Bonds, the excess shall be transferred to the Town to be used in accordance with the Act and the Bond Law. (G) Investment. Moneys in the Reserve Fund shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits resulting from said investment shall be retained in the Reserve Fund subject to the provisions of Section 4.04(E) hereof. Section 4.05. IMPROVEMENT FUND. (A) Establishment of Improvement Fund. The Improvement Fund is hereby established as a separate fund to be held by the Director of Administrative Services to the credit of which deposits shall be made as required by Section 4.01, Moneys in the Improvement Fund shall be held by the Director of Administrative Services for the benefit of the Town, and shall be disbursed, except as otherwise provided in subsection (D) of this Section, for the payment or reimbursement of costs of the Project. (B) Disbursement. Disbursements from the Improvement Fund shall be made by the Director of Administrative Services upon receipt of an Officer's Certificate, which shall: - 18 - (i) set forth the amount required to be disbursed, the purpose for which the disbursement is to be made, the person to which the disbursement is to be paid and state that such disbursement is for a Project cost; and (ii) certify that no portion of the amount then being requested to be disbursed was set forth in any Officer's Certificate previously filed requesting disbursement. (C) Investment. Moneys in the Improvement Fund shall be invested and deposited under Section 6.01 hereof. Interest earnings and profits from such investment and deposit shall be retained in the Improvement Fund to be used for the purposes of such fund. (D) Closing of Fund. Upon the filing of an Officer's Certificate stating that the Project has been completed and that all costs of the Project have been paid or are not required to be paid from the Improvement Fund, the Director of Administrative Services shall transfer the amount, if any, remaining in the Improvement Fund as directed in the Officer's Certificate which directions shall be pursuant to the Resolution of Intention and to the applicable provisions of the Act and the Improvement Fund shall be closed. - 19- ARTICLE V COVENANTS Section 5.01. COLLECTION OF ASSESSMENTS. The Town shall comply with all requirements of the Act, the Bond Law and this Resolution to assure the timely collection of the Assessments, including, without limitation, the enforcement of delinquent Assessments. To that end, the following shall apply: " (A) Tax Roll Collection. The Assessments as set forth on the list thereof on file with the Director of Administrative Services together with the interest thereto, shall be payable in annual series corresponding in number and proportionate amount to the number of installments and principal amounts of the Bonds maturing or becoming subject to mandatory prior redemption under Section 2.03 hereof. An annual proportion of each Assessment shall be payable in each Fiscal Year preceding the date of maturity or mandatory prior redemption date of each of the Bonds issued sufficient to pay the Bonds when due and such proportion of each Assessment coming due in any year, together with the annual interest thereon, shall be payable in the same manner and at the same time and in the same installments as the general taxes on real property are payable, and become delinquent at the same times and in the same proportionate amounts and bear the same proportionate penalties and interests after delinquency as do the general taxes on real property. All sums received from the collection of the Assessments and of the interest and penalties thereon shall be placed in the Redemption Fund. (B) Auditor Record. The Director of Administrative Services shall, before the final date on which the Auditor will accept the transmission of the Assessments for the parcels within the Assessment District for inclusion on the next tax roll, prepare or cause to be prepared, and shall transmit to the Auditor, such data as the Auditor requires to include the installments of the Assessments on the next secured tax roll. The Director of Administrative Services is hereby authorized to employ consultants to assist in computing the installments of the Assessments hereunder and in reconciling Assessments billed to amounts received as provided in the subsection (C) of this Section 5.01. (C) Administrative Costs. In addition to any amounts authorized pursuant to section 8682 of the Bond Law to be included with the annual amounts of installments as aforesaid, the Town, pursuant to section 8682.1 of the Bond Law may cause to be entered on the assessment roll on which taxes will next become due, opposite each lot or parcel of land within the Assessment District in the manner set forth in said section 8682, each lot's pro rata share of the estimated annual expenses of the Town in connection with the administrative duties thereof for the Bonds, including, but not limited to, the costs of registration, authentication, transfer and compliance with the provisions of Article V hereof. Delinquent Assessments shall be subject to foreclosure pursuant to Section 5.02 hereof. Section 5.02. FORECLOSURE. The Town hereby covenants with and for the benefit of the Owners of the Bonds that it will order, and cause to be commenced, and thereafter diligently prosecute an action in the superior court to foreclose the lien of any Assessment or installment thereof which has been billed, but has not been paid, pursuant to and as provided in sections 8830 and 8835, inclusive of the Bond Law and the conditions specified in this Section 5.02 The Director of Administrative Services shall notify the Town Attorney of any such delinquency of which the Director of Administrative Services is aware, and the Town Attorney - 20- shall commence, or cause to be commenced, such foreclosure proceedings, Under this , Section, "commence" means and includes any actions preparatory to filing of any complaint. The Town Attorney is hereby authorized to employ counsel to conduct any such foreclosure proceedings. The following conditions shall apply to the foreclosure proceedings which shall be commenced within 60 days of any of the following determinations which shall be made by the Director of Administrative Services not later than October 1 of each Fiscal Year: (A) If the Director of Administrative Services determines that there is a delinquency of Assessment of $1,500 or more for a prior Fiscal Year or Years for any single parcel of land in the Assessment District. (B) If the Director of Administrative Services determines that the total amount of delinquent Assessments for the prior Fiscal Year for the entire Assessment District, less the total delinquencies under subsection (A) above, exceeds three percent (30/0) of the total Assessments due and payable in the prior Fiscal Year, foreclosure shall be commenced against each parcel of land in the Assessment District with a delinquency of $750 or more for the prior Fiscal Year or Years. . (C) If the Director of Administrative Services determines that the total amount of delinquent Assessment for the prior Fiscal Year for the entire Assessment District, less the total delinquencies under subsections (A) and (B) above, exceeds five percent (50/0) of the total Assessments due and payable for the prior Fiscal Year, foreclosure shall be commenced against each parcel of land within the Assessment District with any amount of delinquency for the prior Fiscal Year or Years. Provided, however, that nothing herein shall prevent the Director of Administrative Services or the Town Attorney from causing the commencement of foreclosure proceedings before the occurrence of any of the foregoing. Section 5.03. PUNCTUAL PAYMENT; COMPLIANCE WITH DOCUMENTS. The Town shall punctually payor cause to be paid the interest and principal to become due with respect to all of the Bonds in strict conformity with the terms of the Bonds and of this Resolution, and will faithfully observe and perform all of the conditions, covenants and requirements of this Resolution and all Supplemental Resolutions. Section 5.04. NO PRIORITY FOR ADDITIONAL OBLIGATIONS. The Town covenants that no additional bonds or other obligations shall be issued or incurred having any priority over the Bonds in payment of principal or interest out of the Assessments. Nothing in this Resolution shall prohibit the Town from issuing bonds or other obligations on a parity with or subordinate to the Bonds and secured by and payable from the Assessments upon such terms as the Town may determine. Section 5.05. FURTHER ASSURANCES. The Town will adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Resolution, and for the better assuring and confirming unto the Owners of the Bonds the rights and benefits provided in this Resolution. Section 5.06. PRIVATE ACTIVITY BOND LIMITATION. The Town shall assure that the proceeds of the Bonds are not so used as to cause the Bonds to satisfy the private business tests of section 141(b) of the Tax Code or the private loan financing test of section 141(c) of the Tax Code. - 21 - Section 5.07. FEDERAL GUARANTEE PROHIBITION. The Town shall not take any action or permit or suffer any action to be taken if the result of the same would be to cause any of the Bonds to be "federally guaranteed" within the meaning of section 149(b) of the Tax Code. Section 5.08. NO ARBITRAGE. The Town shall not take, or permit or suffer to be taken by the Director of Administrative Services or otherwise, any action with respect to the proceeds of the Bonds which, if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the date of issuance of the Bonds would have caused the Bonds to be "arbitrage bonds" within the meaning of section 148 of the Tax Code. Section 5.09. REBATE REQUIREMENT. The Town shall take any and all actions necessary to assure compliance with section 148(f) of the Tax Code, relating to the rebate of excess investment earnings, if any, to the federal governlTlent, to the extent that such section is applicable to the Bonds. Earnings on any reserve fund established under this Resolution shall be used for rebate purposes before any application thereof as credits to the Redemption Fund under Section 4.03(E). Section 5.10. YIELD OF THE BONDS. In determining the yield of the Bonds to comply with Sections 5.08 and 5.09 hereof, the Town will take into account redemption (including premium, if any) in advance of maturity based on the reasonable expectations of the Town, as of the Closing Date, regarding prepayments of Assessments and use of prepayments for redemption of the Bonds, without regard to whether or not prepayments are received or Bonds redeemed. Section 5.11. AMENDMENT. Without the consent of the Owners of the Bonds, the Town may amend this Resolution to add, modify or delete provisions if necessary or desirable to assure compliance with Section 148(f) of the Tax Code, or as otherwise required, to assure the exemption from federal income taxation of interest on the Bonds. Section 5.12. MAINTENANCE OF TAX-EXEMPTION. The Town shall take all actions necessary to assure the exclusion of interest on the Bonds from the gross income of the Owners of the Bonds to the same extent as such interest is permitted to be excluded from gross income under the Tax Code as in effect on the date of issuance of the Bonds. Section 5.13. CONTINUING DISCLOSURE. The Town hereby covenants and agrees that it will comply with and carry out all of the provisions of any continuing disclosure relating to the Bonds. Notwithstanding any other provision of this Resolution, failure of the Town to comply with any continuing disclosure shall not be considered an event of default. - 22- ARTICLE VI INVESTMENT OF FUNDS Section 6.01. DEPOSIT AND INVESTMENT OF MONEYS IN FUNDS. Subject in all respects to the provisions of Section 6.02, moneys in any fund or account created or established by this Resolution and held by the Director of Administrative Services shall be invested by the Director of Administrative Services in Permitted Investments. The following shall apply to such investments: (A) Investments. In the absence of any such Officer's Certificate, the Director of Administrative Services shall invest any such moneys in Permitted Investments described (f) in the definition of Permitted Investments, which funds, by their terms mature prior to the date on which such moneys are required to be paid out hereunder. Obligations purchased as an investment of moneys in any fund shall be deemed to be part of such fund or account, subject, however, to the requirements of this Resolution for transfer of interest earnings and profits resulting from investment of amounts in funds and accounts; (8) Principal or Agent. The Director of Administrative Services may act as principal or agent in the acquisition or disposition of any investment. The Director of Administrative Services shall incur no liability for losses arising from any investments made pursuant to this Section; (C) Commingling. Subject in all respects' to the provisions of Section 5.09, investments in any and all funds and accounts may at the discretion of the Director of Administrative Services be commingled in a separate fund or funds for purposes of making, holding and disposing of investments, notwithstanding provisions herein for transfer to or holding in or to the credit of particular funds or accounts of amounts received or held by the Director of Administrative Services hereunder, provided that the Director of Administrative Services shall at all times account for such investments strictly in accordance with the funds and accounts to which they are credited and otherwise as provided in this Resolution; (D) Sales. The Director of Administrative Services shall sell at the highest price reasonably obtainable, or present for redemption, any investment security whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund or account to which such investment security is credited and the Director of Administrative Services shall not be liable or responsible for any loss resulting from the acquisition or disposition of such investment security in accordance herewith; and (E) Director of Administrative Services. For any funds held by the Director of Administrative Services, the foregoing provisions of this Section 6.01 shall also apply, except that an Officer's Certificate shall not be required. For such funds the Director of Administrative Services shall keep records or accounts of all expenditures or disbursements therefrom which records shall be available for inspection during business hours on any Business Day upon prior written request. Section 6.02. ACQUISITION, DISPOSITION AND VALUATION OF INVESTMENTS. The following shall apply to investments of funds and accounts under this Resolution: (A) Fair Market Value. Except as otherwise provided in subsection (B) of this Section, the Town covenants that all investments of amounts deposited in any fund or account - 23- under this Resolution, or otherwise containing gross proceeds of the Bonds (under section 148 , of the Tax Code) shall be acquired, dispo~ed of and valued (as of the date that valuation is required by this Resolution or the Tax Code) at Fair Market Value: (B) Reserve Fund. Investments in funds or accounts (or portions thereof) that are subject to a yield restriction under applicable provisions of the Tax Code, and (unless valuation is undertaken at least annually) investments in any reserve fund, shall be valued at their present value (within the meaning of section 148 of the Tax Code). Section 6.03. LIABILITY OF TOWN. The Town shall not incur any responsibility in respect of the Bonds or this Resolution other than in connection with the duties or obligations explicitly provided herein or in the Bonds. The Town shall not be liable to any Owner in connection with the performance of its duties hereunder, except for its own gross negligence or willful default. The Town shall not be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions, covenants or agreements of the Agent .herein or of any of the documents executed by the Agent in connection with the Bonds, or as to the existence of a default thereunder. Under this Resolution, the following shall apply to the Town: (A) Reliance. In the absence of bad faith, the Town, including the Director of Administrative Services, may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Town and conforming to the requirements of this Resolution. The Town, including the Director of Administrative Services, shall not be liable for any error of judgment made in good faith unless it shall be proved that it was negligent in ascertaining the pertinent facts; (B) Expenditures. No provision of this Resolution shall require the Town to expend or risk its own general funds or otherwise incur any financial liability (other than with respect to the foreclosure proceedings for delinquent Assessments and the payment of fees and costs of the Agent) in the performance of any of its obligations hereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it; (C) Counsel. The Town may rely and shall be protected in acting or refraining from acting upon any notice, resolution, request, consent, order, certificate, report, warrant, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or proper parties. The Town may consult with counsel, who may be the Town Attorney, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith; (D) Owners. The Town shall not be bound to recognize any person as the Owner of a Bond unless duly registered and until such Bond is submitted for inspection, if required, and his. title thereto. satisfactorily established, if disputed; and (E) Certificate. Whenever in the administration of its duties under this Resolution the Town shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of willful misconduct on the part of the Town, be deemed to be conclusively proved and established by a certificate of the Agent or other expert retained by the Town for the purposes hereof, and such certificate shall be full warrant to the Town for any action taken or suffered under the provisions of this Resolution or any Supplemental Resolution upon the faith thereof, but in its discretion the Town may, in lieu - 24- thereof, accept other evidence of such matter or may require such additional evidence as to it , may deem reasonable. Section 6.04. EMPLOYMENT OF AGENTS BY TOWN. In order to perform its duties and obligations hereunder, the Town may employ such persons or entities as it deems necessary or advisable. The Town shall not be liable for any of the acts or omissions of such persons or entities employed by it with reasonable care and in good faith hereunder, and shall be entitled to rely, and shall be fully protected in doing so, upon the opinions, calculations, determinations and directions of such persons or entities. - 25- ARTICLE VII MODIFICATION OR AMENDMENT Section 7.01. AMENDMENTS PERMITTED. This Resolution and the rights and obligations of the Town and of the Owners of the Bonds may be modified or amended at any time by a Supplemental Resolution pursuant to the affirmative vote at a meeting of Owners, or with the written consent without a meeting, of the Owners of at least sixty percent (6001<>) in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in Section 7.04. No such modification or amendment shall (i) extend the maturity of any Bond or reduce the interest rate thereon, or otherwise alter or impair the obligation of the Town to pay the principal of, and the interest and any premium on, any Bond, without the express consent of the Owner of such Bond, or (ii) permit the creation by the Town of any pledge or lien upon the Assessments superior to or on a parity with the pledge and lien created for the benefit of the Bonds (except as otherwise permitted by the Act, this Resolution, the laws of the State of California), or reduce the percentage of Bonds required for the amendment hereof, or to amend this Section 7.01. Any such amendment may not modify any of the rights or . obligations of the Agent without its written consent. This Resolution and the rights and obligations of the Town and of the Owners may also be modified or amended at any time by a Supplemental Resolution, without the consent of any Owners, only to the extent permitted by law and only for anyone or more of the following purposes: (A) Additions. To add to the covenants and agreements of the T own in this Resolution contained, other covenants and agreements thereafter to be observed, or to limit or surrender any right or power herein reserved to or conferred upon the Town; (B) Affecting Bonds. To make modifications not adversely affecting any outstanding. series of Bonds of the Town in any material respect; (C) Corrections. To make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained in this Resolution, or in regard to questions arising under this Resolution, as the Town may deem necessary or desirable and not inconsistent with this Resolution, and which shall not adversely affect the rights of the Owners of the Bonds; or (D) Tax Exemption. To make such additions, deletions or modifications as may be necessary or desirable to assure exemption from federal income taxation of interest on the Bonds. Section 7.02. OWNERS' MEETINGS. The Town may at any time call a meeting of the Owners. In such event the Town is authorized to fix the time and place of said meeting and to provide for the giving of notice thereof and to fix and adopt rules and regulations for the conduct of said meeting. Section 7.03. PROCEDURE FOR AMENDMENT WITH WRITTEN CONSENT OF OWNERS. The Town may at any time adopt a Supplemental Resolution amending the provisions of the Bonds or of this Resolution or any Supplemental Resolution, to the extent that such amendment is permitted by Section 7.01 hereof, to take effect when and as provided in this Section 7.03. With respect to such Supplemental Resolution under this Section 7.03, the following shall apply: - 26- (A) Request. A copy of such Supplemental Resolution, together with a request to Owners for their consent thereto, shall be mailed by first class mail, by the Director of Administrative Services to each Owner of Bonds Outstanding, but failure to mail copies of such Supplemental Resolution and request shall not affect the validity of the Supplemental Resolution when assented to as in this Section provided; (8) Consents. Such Supplemental Resolution shall not become effective unless there shall be filed with the Agent the written consents of the Owners of at least sixty percent (60o!b) in aggregate principal amount of the Bonds then Outstanding (exclusive of Bonds disqualified as provided in Section 7.04) and a notice shall have been mailed as hereinafter in this Section provided. Each such consent shall be effective only if accompanied by proof of ownership of the Bonds for which such consent is given, which proof shall be such as is permitted by Section 8.04. Any such consent shall be binding upon the Owner of the Bonds giving such consent and on any subsequent Owner (whether or not such subsequent Owner has notice thereof) unless such consent is revoked in writing by the Owner giving such consent or a subsequent Owner by filing such revocation with the Agent prior to the date when the notice hereinafter in this Section provided for has been mailed; and (C) Notice. After the Owners of the required percentage of Bonds shall have filed their consents to the Supplemental Resolution, the Town shall mail a notice to the Owners in the manner above provided in this Section for the mailing of the Supplemental Resolution, stating in substance that the Supplemental Resolution has been consented to by the Owners of the required percentage of Bonds and will be effective as provided in this Section but failure to mail copies of said notice shall not affect the validity of the Supplemental Resolution or consents thereto). Proof of the mailing of such notice shall be filed with the Agent. A record, consisting of the papers required by this Section 7.03 to be filed with the Agent, shall be proof of the matters therein stated until the contrary is proved. The Supplemental Resolution shall become effective upon the filing with the Agent of the proof of matters therein of such notice, and the Supplemental Resolution shall be deemed conclusively binding (except as otherwise hereinabove specifically provided in this Article) upon the Town and the Owners of all Bonds at the expiration of sixty (60) days after such filing, except in the event of a final decree of a court of competent jurisdiction setting aside such consent in a legal action or equitable proceeding for such purpose commenced within such sixty-day period. , Section 7.04. DISQUALIFIED BONDS. Bonds owned or held for the account of the Town, excepting any pension or retirement fund, shall not be deemed Outstanding for the purpose of any vote, consent or other action or any calculation of Outstanding Bonds provided for in this Article VII, and shall not be entitled to vote upon, consent to, or take any other action provided for in this Article VII. Section 7.05. EFFECT OF SUPPLEMENTAL RESOLUTION. From and after the time any Supplemental Resolution becomes effective pursuant to this Article VII, this Resolution shall be deemed to be modified and amended in accordance therewith, the respective rights, duties and obligations under this Resolution of the Town and all Owners of Bonds Outstanding shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such Supplemental Resolution shall be deem'ed to be part of the terms and conditions of this Resolution for any and all purposes. Section 7.06. ENDORSEMENT OR REPLACEMENT OF BONDS ISSUED AFTER AMENDMENT. The Town may determine that Bonds issued and delivered after the effective - 27- date of any action taken as provided in this Article VII shall bear a notation, by endorsement or , otherwise, in form approved by the Town, as to such action. In that case, upon request of the Owner of any Bond Outstanding at such effective date and presentation of his Bond for that purpose at the Principal Office of the Agent or at such other office as the Town may select and designate for that purpose, a suitable notation shall be made on such Bond. The Town may determine that new Bonds, so modified as in the opinion of the Town is necessary to conform to such Owners' action, shall be prepared, executed and delivered. In that case, upon request of the Owner of any Bonds then Outstanding, such new Bonds shall be exchanged at the Principal Office of the Agent without cost to any Owner, for Bonds then Outstanding, upon surrender of such Bonds. Section 7.07. AMENDATORY ENDORSEMENT OF BONDS. The provisions of this Article VII shall not prevent any Owner from accepting any amendment as to the particular Bonds held by such Owner, provided that due notation thereof is made on such Bonds. - 28- ARTICLE VIII MISCELLANEOUS Section 8.01. BENEFITS OF AGREEMENT LIMITED TO PARITIES. Nothing in this Resolution, expressed or implied, is intended to give to any person other than the Town, the Agent and the Owners, any right, remedy or claim under or by reason of this Resolution. Any covenants, stipulations, promises or agreements in this Resolution contained by and on behalf of the Town shall be for the sole and exclusive benefit of the Owners and the Agent. Section 8.02. SUCCESSOR AND PREDECESSOR. Whenever in this Resolution or any Supplemental Resolution either the Town or the Agent is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Resolution contained by or on behalf of the Town shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not. Section 8.03. DISCHARGE OF RESOLUTION. Subject to the provisions of Section 2.03 hereof, the Town may pay and discharge the entire indebtedness on all Bonds Outstanding in anyone or more of the following ways: (A) Payment. By paying or causing to be paid the principal of (including any Sinking Fund Payments) and interest and any premium on all Bonds Outstanding, as and when the same become due and payable; . (B) Cash. By depositing with the Agent, in trust, at or before maturity, money which, together with the amounts then on deposit in the Redemption Fund is fully sufficient to pay all Bonds Outstanding, including all principal, interest and any applicable redemption premiums, or; (C) Federal Securities. By irrevocably depositing with the Agent, in trust, cash and Federal Securities in such amount as the Town shall determine, as confirmed by an independent certified public accountant, which will, together with the interest to accrue thereon and moneys then on deposit in the Redemption Fund be fully sufficient to pay and discharge the indebtedness on all Bonds, including all principal, interest and any applicable redemption premiums, at or before their respective maturity dates; (0) Actions. If such Bonds are to be redeemed prior to the maturity thereof notice of such redemption shall have been given as in this Resolution provided or provision satisfactory to the Agent shall have been made for the giving of such notice, then, at the election of the Town, and notwithstanding that any Bonds shall not have been surrendered for payment, the pledge of the Assessments and other funds provided for in this Resolution and all other obligations of the Town under this Resolution with respect to all Bonds Outstanding shall cease and terminate, except only the obligation of the Town to payor cause to be paid to the Owners of the Bonds not so surrendered and paid all sums due thereon, the obligation of the Town to assure that no action is taken or failed to be taken if such action or failure adversely affects the exclusion of interest on the Bonds from gross income for federal income tax purposes, and all amounts owing to the Agent pursuant to Section 7.05 hereof; and thereafter Assessments shall not be payable to the Agent. Notice of such election shall be filed with the Agent. Any funds thereafter held by the Agent upon payments of all fees and expenses of the Agent, which are - 29- not required for said purpose, shall be paid over to the Town to be used by the Town as , provided in the Act and the Bond Law. Section 8.04. EXECUTION OF DOCUMENTS AND PROOF OF OWNERSHIP. Any request, declaration or other instrument which this Resolution may require or permit to be executed by Owners may be in one or more instruments of similar tenor, and shall be executed by Owners in person or by their attorneys appointed in writing. Except as otherwise herein expressly provided, the fact and date of the exeGution by any Owner or his attorney of such req uest, declaration or other instrument, or of such writing appointing such attorney, may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act, that the person signing such request, declaration or other instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness of such execution, duly sworn to before such notary public or other officer. The ownership of registered bonds and the amount, maturity, number and date of holding the same shall be proved by the registry books. Any consent, request, declaration or other instrument or writing of the then registered Owner of any Bond shall bind all future Owners of such Bond in respect of anything done or suffered to be done by the Town or the Agent in good faith and in accordance therewith. Section 8.05. WAIVER OF PERSONAL LIABILITY. No member, officer, agent or employee of the Town shall be individually or personally liable for the payment of the principal of, or interest or any premium on, the Bonds; but nothing herein contained shall relieve any such member, officer, agent or employee from the performance of any official duty provided by law. Section 8.06. NOTICES AND DEMANDS. Any notice or demand hereunder to the Town or the Agent may be given or served by being deposited postage prepaid in a post office letter box addressed (until another address is provided) as follows: A) Town: Director of Administrative Services Town of Tiburon 1505 Tiburon Blvd. Tiburon, CA 94920 (B) Agent: The Bank of New York Trust Company, N.A. 550 Kearny Street, Suite 600 San Francisco, CA 94108-2527 Attn: Corporate Trust Division Section 8.07. PARTIAL INVALIDITY. If any Section, paragraph, sentence, clause or phrase of this Resolution shall for any reason be held illegal or unenforceable, such holding shall not affect the validity of the remaining portions of this Resolution. The Town hereby declares that it would have adopted this Resolution and each and every other Section, paragraph, sentence, clause or phrase hereof and authorized the issue of the Bonds pursuant thereto irrespective of the fact that anyone or more Sections, paragraphs, sentences, clauses, or phrases of this Resolution may be held illegal, invalid or unenforceable. - 30- Section 8.08. UNCLAIMED MONEYS. Anything contained herein to the contrary notwithstanding, any moneys held by the Director of Administrative Services in trust for the payment and discharge of the principal of, and the interest and any premium on, the Bonds which remains unclaimed for two (2) years after the date when payments of principal, interest and any premium have become payable, shall be repaid by the Director of Administrative Services to the Town as its absolute property free from any trust, and the Director of Administrative Services shall thereupon be released and discharged with respect thereto. Section 8.09. APPLICABLE LAW. This Resolution shall be governed by and enforced in accordance with the laws of the State of California applicable to contracts made and performed in the State of California. Section 8.10. CONFLICT WITH ACT. In the event of a conflict between any provision of this Resolution with any provision of the Act, the provision of the Act shall prevail over the conflicting provision of this Resolution. Section 8.11. CONCLUSIVE EVIDENCE OF REGULARITY; VALIDITY. Bonds issued pursuant to this Resolution shall constitute conclusive evidence of the regularity of all proceedings under the Act relative to their issuance and the levy of the Assessments. The validity of the authorization and issuance of the Bonds shall not be dependent upon the completion and/or acquisition of the Projector any part thereof or the performance by any person or such person's obligation(s) with respect to the Project. Section 8.12. PAYMENT ON BUSINESS DAY. In any case where the date of the maturity of interest or of principal, (and premium, if any) of the Bonds or the date fixed for redemption of any Bonds or the date any action is to be taken pursuant to this Resolution is other than a Business Day, the payment of interest or principal, including Sinking Fund Payments, (and any redemption premium) or the action need not be made on such date but may be made on the next succeeding day which is a Business Day with the same force and effect as if made on the date required and no additional interest shall accrue from such Interest Payment Date until such Business Day. Section 8.13. REPEAL OF INCONSISTENT RESOLUTIONS. Any resolution of the Council, and any part of such resolution, inconsistent with this Resolution, is hereby repealed to the extent of such. inconsistency. Section 8.14. CONSULTANTS. All actions mandated by this Resolution to be performed by the Director of Administrative Services may be performed by the designee thereof or such other official of the Town or independent contractor, consultant or trustee duly authorized by the Town to perform such action or actions in furtherance of all or a specific portion of the requirements hereof. Section 8.15. CERTIFIED COPIES. The Clerk shall cause to be furnished a certified copy of this resolution to the Director of Administrative Services, to the Agent, and to the Auditor of the County. Section 8.16. EFFECTIVE DATE OF THE RESOLUTION. This Resolution shall become effective upon the date of its adoption. - 31 - PASSED AND ADOPTED at the regular meeting of the Town Council of the Town of Tiburon, State of California, on this 2nd day of February 2005, by the following vote to wit: AYES: NOES: ABSENT: COUNCILMEMBERS: COUNCILMEMBERS COUNCILMEMBERS ATTEST:I-;..;7 ; .,. / l.~~ l Cl-CC}U . DIANE CRANE IACOPI, TOWN CLERK Berger, Fredericks, Gram. Smith, Slavitz None None ~l~~~~ TOWN OF TIBURON EXHIBIT A TOWN OF TIBURON Lyford Cove Utility Undergrounding Assessment District Limited Obligation Improvement Bonds TERMS AND CONDITIONS The following terms and conditions shall be part of the within Resolution Authorizing the Issuance of Refunding Bonds (the "Resolution of Issuance") as if set forth in the text thereof: Principal Amount: Under Section 2.01, the actual aggregate principal amount of the Bonds is $ and the Bond Date is , 2005. The first Interest Payment Date is 2,200_. Principal Maturities and Interest: Under Section 2.02 the maturities and rates of interest of the Bonds are as follows: Maturity Date (September 2) Principal Amount ($) Interest Rate (010) Term Bonds maturing on September 2, 20_ (the % per annum, subject to mandatory sinking fund Together with $ "Term Bonds"), at the interest rate of redemption hereunder. Bond Redemption: Under Section 2.03, the Redemption provisions are as follows: Non-Sinking Fund Redemption. Each Outstanding Bond, or any portion of the principal thereof, in the principal amount of $5,000 or any integral multiple of $5,000, will be subject to mandatory redemption from any funds available therefor from proceeds of prepayments deposited in the Prepayment Account, or to optional redemption from sources other than prepayments, including the proceeds of refunding bonds, on any Interest Payment Date in any year by giving notice as provided herein and by paying the principal amount thereof, plus interest to the date of redemption and the applicable Redemption Premium determined as follows: Redemotion Dates On or before September 2, 20_ March 2, 20_ and September 2, 20_ March 2, 20_ and thereafter Redemotion Premium _0/0 _ala _0/0 Mandatory Sinking Fund Redemption. The Bonds maturing on September 2, 20_, are subject to mandatory redemption, in part by lot, on September 2 in each year, EXHIBIT A Page 1 commencing September 2,20_, from sinking fund payments from the redemption fund at a redemption price equal to the principal amount thereof to be redeemed, without premium, as follows: Sinking Fund Redemption Date (September 2) Principal Amount To Be Redeemed Funds: Deposit to Funds: Under Section 4.01, on or before, the Closing Date, the Town shall cause the following transfers and deposits shall be made: to the Costs of Issuance Fund; 1 . $ 2. $ 3. $ 4. $ to the Redemption Fund (Capitalized Interest); to the Reserve Fund; and to the Improvement Fund. EXHIBIT A Page 2 EXHIBIT B FORM OF BOND United States of America State of California County of Marin Registered ***$*** County of Registered Number A- --- LIMITED OBLIGATION IMPROVEMENT BOND TOWN OF TIBURON Lyford Cove Utility Undergrounding Assessment District INTEREST RATE REGISTERED OWNER: PRINCIPAL AMOUNT: *** MATURITY DATE DATED DATE February 23,2005 CUSIP DOLLARS*** Under and by virtue of the Improvement Bond Act of 1915, Division 10 (commencing with Section 8500) of the Streets and Highways Code (the "Act") the Town of Tiburon (the Town) County of Marin, State of California, will,' out of the redemption fund for the payment of the bonds issued upon the unpaid portion of assessments made for the acquisition, work and improvements more fully described in proceedings taken pursuant to Resolution of Intention No. 15-2003 adopted by the Town Council of the Town on May 21, 2003, pay to the registered owner named above or registered assigns, on the maturity date stated above, the principal amount stated above, in lawful money of the United States of America and in like manner will pay interest at the rate per annum stated above, payable semiannually on March 2 and September 2 (each an "Interest Payment Date") in each year commencing on 2, 200_. This Bond bears interest from the Interest Payment Date next preceding its date of authentication and registration unless it is 'authenticated and registered (i) prior to an Interest Payment Date and after the close of business of the fifteen day preceding such Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or (ii) prior to the close of business on the fifteenth day of the calendar month preceding 2, 200_, in which event it shall bear interest from its date, until payment of such principal sum shall have been discharged. Both the principal of and redemption premium hereon of matured bonds or bonds called for redemption prior to maturity, if any, shall be paid upon surrender to The Bank of New York Trust Company, N.A., as Authentication Agent, Registrar, Transfer and Paying Agent (the "Agent"), in San Francisco, California, and interest hereon shall be paid by check or draft mailed to the registered owner hereof at the registered owner's address as it appears on the records of the Agent, or at such address as may have been filed with the Agent, for that purpose, as of the fifteenth day of the calendar month immediately preceding each Interest Payment Date; provided however, upon request in writing of an Owner of $1,000,000 or more in aggregate principal amount of Bonds, such request having been made before fifteen calendar days preceding an Interest Payment Date, such interest shall be paid on such Interest Payment Date by wire transfer in immediately available funds to an account in the continental United States designated by such Owner to the Agent. This Bond will continue to bear interest after maturity at the rate above stated provided that it is presented at maturity and payment hereof is refused upon the sole ground that there EXHIBIT B Page 1 are not sufficient moneys in said redemption fund with which to pay same. If it is not presented , at maturity interest hereon will run only until maturity. This Bond shall not be entitled to any benefit under the Act or the Resolution entitled "A Resolution of the Town Council of the Town of Tiburon Authorizing Issuance of Limited Obligation Improvement Bonds," (the "Resolution of Issuance") adopted by the Town Council on February 2, 2005, or become valid or obligatory for any purpose, until the certificate of authentication and registration hereon shall have been dated and signed by the Agent. IN WITNESS WHEREOF, the Town of Tiburon has caused this Bond to be signed in facsimile by the Treasurer of the Town and by its Town Clerk, and has cause its corporate seal to be reproduced in facsimile hereon all as of the 23rd day of February, 2005. TOWN OF TIBURON Treasurer T own Clerk CERTIFICATE OF AUTHENTICATION AND REGISTRATION This is one of the bonds described in the within mentioned Resolution of Issuance. Dated: 200_ The Bank of New York Trust Company, N.A. as Agent By , Authorized Officer (reverse side of bond) ADDITIONAL PROVISIONS OF THE BOND This Bond is one of several annual series of bonds of like date, tenor and effect, but differing in amounts, maturities and interest rates, issued by the Town under the Act and the Resolution of Issuance for the purpose of providing means for paying for the improvements and the refunding of the bonds as more particularly described in said proceedings, and is secured by the moneys in the redemption fund (as may be limited by the Resolution of Issuance) and by the unpaid portion of said assessments made for the payment of said refunding, and, including principal and interest, is payable exclusively out of said fund. This Bond is transferable by the Owner hereof, in person or by the Owner's attorney duly authorized in writing, at said office of the Agent, subject to the terms and conditions provided in the Resolution of Issuance, including the payment of certain charges, if any, upon surrender and cancellation of this Bond. Upon such transfer, a new registered Bond or Bonds, of any authorized denomination or denominations, of the same maturity, and for the same aggregate principal amount, will be issued to the transferee in exchange herefor. Bonds shall be registered only in the name of an individual (including joint owners), a corporation, a partnership or a trust. EXHIBIT B Page 2 Neither the Town nor the Agent shall be required to make such exchange or registration of transfer of Bonds during the fifteen (15) days immediately preceding any Interest Payment Date or any exchange or transfer of a Bond after such Bond has been called for redemption. The Town and the Agent may treat the Owner hereof as the absolute owner for all purposes, and the Town and the Agent shall not be affected by any notice to the contrary. This Bond, or any portion of the principal thereof, in the principal amount of $5,000 or any integral multiple of $5,000, will be subject to mandatory redemption from any funds available therefore from the prepayments of assessments, and to optional redemption from sources other than prepayments, including the proceeds of refunding bonds, on any Interest Payment Date in any year by giving notice as provided herein and by paying the principal amount thereof, plus interest to the date of redemption and the applicable Redemption Premium as follows: Redemption Dates Premium On or before September 2,20_ March 2, 20_and September 2, 20_ March 2, 20_ and thereafter Redemotion _% _0/0 _0/0 This Bond is a Limited Obligation Improvement Bond because, under the Resolution of Issuance, the Town is not obligated to advance funds from the Town treasury to cover any deficiency which may occur in the redemption fund for the bonds; however, the Town is not prevented, in its sole discretion, from so advancing funds. The bonds maturing on September 2,20_ are subject to mandatory redemption, in part by lot, on September 2 in each year, commencing September 2, 2020, from sinking fund payments from the redemption fund at a redemption price equal to the principal amount thereof to be redeemed, without premium, as follows: Sinking Fund Redemption Date (SeDtember 2) Principal Amount To Be Redeemed I hereby certify that the following is a correct copy of the signed legal opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, bond counsel: (INSERT OPINION HERE) EXHIBIT B Page 3 ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this bond, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM TEN ENT JT TEN as tenants in common as tenants by the entireties as joint tenants with right of survivorship and not as tenants in common UNIF GIFT MIN ACT - Custodian (Cust) (Minor) under Uniform Gifts to Minors Act (State) Additional abbreviations may also be used though not in the above list ASSIGNMENT For value received, the undersigned do(es) hereby sell, assign and transfer unto (Name, Address and Tax Identification or Social Security Number of Assignee) the within mentioned Bond and hereby irrevocably constitute( s) and appoint( s) , attorney, to transfer the same on the registration books of the Agent, with full power of substitution in the premises. Dated: Signature Guaranteed: NOTICE: The signature(s) on this assignment must correspond with the name( s) as written on the face of the registered Bond in every particular without alteration or enlargement or any change whatsoever. EXHIBIT B Page 4